Just after obtaining the information—and right before an earnings release—Oleksandr Dorozhko purchased 630 put options on IMS’ common stock, according to Reuters. The next day IMS’ stock dropped by 28 percent and Dorozhko earned $287,346 after selling the options.

The SEC filed a complaint against Dorozhko in late 2007, but on January 7, 2008, the District Court denied the SEC’s motion for a preliminary injunction, according to a statement by the SEC. The Court concluded that “Dorozhko’s alleged ‘stealing and trading’ or ‘hacking and trading’ does not amount to a violation … because Dorozhko did not breach any fiduciary or similar duty ‘in connection with’ the purchase or sale of a security.”

Upon appeal, the U.S. Court of Appeals for the Second Circuit thought otherwise, saying “that nothing in the U.S. Supreme Court’s jurisprudence or prior decisions of our Court expressly imposes a fiduciary-duty requirement on the ordinary meaning of ‘deceptive’ where the alleged fraud is an affirmative misrepresentation rather than a nondisclosure.”

After the case was sent back to the District Court, the judge ordered the $580,000 penalty.

The clients say that the Willis Group illegally vouched for R. Allen Stanford, the owner of Stanford Financial Group, in letters he sent to his customers, according to a report by Bloomberg News. The complaint alleges that Willis acted as a sales agent for Stanford Financial, crossing the line of being solely an insurance broker.

All of the plaintiffs in this case are from Venezuela. A previous, similar case was filed on behalf of former Mexican clients of Stanford.

A spokesperson for the Willis Group told the New York Times that “it did not suspect any of its workers knew of fraud at Stanford” and that the company will “defend itself vigorously.”

“The personal compensation received by CEOs while the companies they serve engage in wrongdoing can be clawed back,” said Robert Khuzami, Director of the SEC’s Division of Enforcement, in a statement released by the SEC. “The costs of such misconduct need not be borne by shareholders alone.”

“Jenkins was captain of the ship and profited during the time that CSK was misleading investors about the company’s financial health,” said Rosalind R. Tyson, Director of the SEC’s Los Angeles Regional Office, in the statement. ‘The law requires Jenkins to return those proceeds to CSK.”

Commentary: The final line of the SEC statement reads, “The SEC’s complaint does not allege that Jenkins engaged in the fraudulent conduct.” This is an important new precedent set by the SEC. Now, even if a CEO is unaware of accounting fraud occurring within his or her organization, he or she is still liable for it. The SEC was given the power to do this through claw back provisions of Sarbanes-Oxley, though this is the first time the provisions have been used.

One of the biggest changes brought about by the new bill is the reversal of the recent Supreme Court Decision in Allison Engine Co. v. United States. That decision created a loophole in which subcontractors receiving government money would not be liable under the False Claims Act, according to a statement released by the National Whistleblowers Center.

With the new legislation, a company can be charged under the FCA if an employee “knowingly makes a false claim to obtain money or property, any part of which is provided by the Government without regard to whether the wrongdoer deals directly with the Federal Government; with an agent acting on the Government’s behalf; or with a third party contractor, grantee, or other recipient of such money or property.”

Previously, government subcontractors could only be charged under the FCA if they knowingly and intentionally defrauded the government, not the primary contractor.

The bill was first introduced by Senators Patrick Leahy of Vermont and Chuck Grassley of Iowa in February.

If you’re so inclined, you can read the full text of the bill here. Of course, the simplest way to protect yourself and keep this all straight is…just don’t defraud anyone.

Michelin and Total quickly denied the charges, according to a report by the UK’s Independent Newspaper. A spokesman for Total was quoted as saying, “All we have in Liechtenstein is two filling stations.”

While news of this action was “leaked” just days before the G20’s London Summit, many diplomatic sources were quoted in the story as saying that the move was a political move to help restore domestic confidence in President Sarkozy.

Schwarzman, CEO of asset management firm Blackstone Group, was referring to charges that the SEC brought against 33-year-old Managing Director Ramesh Chakrapani who is based out of the company’s London offices. Chakrapani is accused of handing out privileged information regarding the 2006 takeover of Albertson’s, a national supermarket retailer that hired Blackstone’s M&A team to oversee the transaction.

Chakrapani, who was a vice president at the time and worked on the Albertson’s takeover, allegedly sent at least 20 calls and 18 text messages to a friend. The friend, an unnamed financial analyst, used the info to profit to the tune of $3.6 million.

Chakrapani has been suspended, according to Schwarzman’s company-wide letter. Now he’s awaiting trial set for next Tuesday, according to CNN. Bail is set at $300,000, but he has some room to move around as his travel was restricted to New York City and … California.

In January, the Guidelines Monitoring Group (GMG), the group established to verify compliance with the code, released its first report and the results were less than impressive.

The report states “almost all of the firms” complied with many of the guidelines/requirements, though the method in which the firms “complied” varied drastically. Overall, the report claimed that fewer than 50 percent of the firms which voluntarily signed onto the Code complied with 100 percent of the guidelines.

In 2000 Markopolis was a former employee of a rival firm to Madoff’s, and later in 2004 began his own fraud investigation practice. Markopolis (and a few of his friends) spent eight years trying to figure out how Madoff was illegally generating 12% returns for his investors amidst a terrible market. They went so far as to say they made a hobby out of trying to figure out Madoff’s secret.

From the article:

“Some people play fantasy sports, that was how it was with us — Madoff was our fantasy sport,” Mr. Markopolos recalls. “We wanted him nailed.”

According to the article, the SEC determined that “Mr. Madoff personally ‘misled the examination staff about the nature of the strategy’ used by the Fairfield funds and other hedge-fund accounts, and also ‘withheld from the examination staff information about certain of these customers’ accounts.’”

The article continues:

The staff recommended closing the investigation because Mr. Madoff agreed to register his investment-advisory business and Fairfield agreed to disclose information about Mr. Madoff to investors. The SEC report said the staff closed the case “because those violations were not so serious as to warrant an enforcement action.”

Back then Madoff only managed around $10 billion. Too bad he wasn’t discovered until his portfolio reached five times that size…

Take a look at the WSJ’s story, which also includes a number of documents Markopolos sent to the SEC over the past few years.

The case began in 2004 focusing on alleged illegal payments made by Alstom, creator of the TGV train (pictured), from 1995 to 2003, but has since expanded to payments made up to 2008. The investigation has expanded to payments made in Italy, Brazil, Zambia and Mexico, according to the WSJ article.

Alstom’s Compliance Officer, reported to be Bruno A. Kaelin, was in charge of a Swiss Slush Fund that allegedly paid bribes on behalf of the company to earn lucrative contracts. One such alleged payment was a $6.8 million payout to earn a $45 million contract for a Sao Paolo subway.

It remains to be seen how much the company will ultimately be fined (millions of dollars have already been seized), but it’s likely that between the payouts the company made and the fines that it could receive, Alstom will end up dishing out far more money than it earned from making the alleged bribes in the first place.

The changes stem from a summer 2006 case in which Judge Lewis A. Kaplan of the U.S. District Court in Manhattan dismissed tax-shelter charges against 13 KPMG employees after determining that the government abused its influence and forced KPMG to cut off legal support to its employees. An appeals court upheld the decision today, leading to the rewriting of internal DOJ guidelines.

The reaction so far has been mixed. The New York Times quotes:

A defense lawyer, Mike Madigan, called the ruling a landmark.

“We’re all on cloud nine or a higher one if there is such a thing,” Mr. Madigan said. “It’s really just a great day for the criminal justice system in America.”

On the other hand, the Wall Street Journal quotes:

A coalition that includes the U.S. Chamber of Commerce and the American Civil Liberties Union issued a statement saying that despite improvements made by [Deputy Attorney General Mark] Filip’s revisions: “Federal legislation is still needed to ensure a permanent and lasting solution to the problem of government-enforced waivers of privilege. The Justice Department’s track record of five different policies in ten years cries out for a permanent legislative solution that cannot be revised at the whim of each new Deputy Attorney General.”

Others point out that, while this will save companies legal liability from the DOJ, it doesn’t protect them from the Securities and Exchange Commission and other departments that may come after them for similar charges.

Dong allegedly tipped off his younger brother, Dong Dewei, and a former classmate, Zhao Shuya, about the acquisition, and both allegedly profited from the deal. According to Xinhua News Agency, they raked in 50 million yuan ($7.3 million) and 1 million yuan ($146,000) respectively, after buying Yan Bian Road stock before the deal was finalized and publicized. Although the three defendants have reportedly already confessed to the crimes, they denied their confessions in court, claiming they were extracted through intimidation and inducement by Chinese police.

The Anti-Corruption Commission was reinstated last January and “made independent and given strong powers in an effort to clean up the country’s graft-tainted reputation,” according to the story.

The report also points out that Bangladesh is annually rated as one of the most corrupt countries in the world by Transparency International. While the discovery of the bribery is laudable, it’s also a testament to that ranking.

The suits allege that McKesson and First DataBank, a subsidiary of Hearst Corporation that specializes in medical databases, conspired to boost the profits pharmacies make on medicine sales. The plaintiffs argue that rather than profiting directly from the scheme, distributors manipulated pricing to gain favor with retailers such as Rite Aid Corp. and Wal-Mart and to increase its market share, according to Bloomberg.

Since the Racketeer Influenced and Corrupt Organizations Act triples the damages awarded in racketeering cases, and because the plaintiffs claim the alleged backroom deal cost consumers $5 billion, the total damages that McKesson Corp faces is $15 billion. Even as the largest drug wholesaler in the U.S., that’s a number McKesson can’t ignore. According to experts, it’s almost a guarantee that the company will settle the case.

According to the website Deutsche Welle, Germany and the United States top TI’s list as leading the fight against corruption. One expert told the site that those two countries are “at the forefront in applying an OECD [Organization for Economic Cooperation and Development] anti-corruption convention.”

The website also noted Germany’s pursuit of Siemens as proof of the country’s proactive anti-corruption habits. You can read more about the Siemens’ case here.

And, on the other end of the spectrum, the article reminds readers who may be surprised to see the UK on the bottom of the list that the BAE debacle is still raging on…

The insider trading allegations stemmed from the delay of the Airbus A380, a new jumbo jet. Back in 2005, several EADS executives sold massive amounts of stock just before the public announcement of the A380 delay, which caused Airbus stock to plummet.

Recently, two U.S. law firms have entered the fracas by filing suit against EADS. One case was filed by the law firm Coughlin Stoia Geller Rudman & Robbins of San Diego, and the other by the law firm Dreier of New Yorker, both on behalf of U.S. shareholders that own EADS shares on European Exchanges. The two suits are seeking class-action status.

Currently, French regulators are looking into the actions of the companies, which may pose a problem for the U.S. suits.

Bloomberg News reported the following:

“Even if U.S. rules allow them to ask for higher damages, I think we’re more likely to actually win them,” Frederik-Karel Canoy said today in a telephone interview. “Because of the on-going criminal investigation in France, the evidence will all be kept here. I don’t see how we can collaborate on it.”

The U.S. attorneys shot back:

Dreier lawyer Brian Kerr in a telephone interview today [said] that he and his clients “don’t see why we need to wait until the French judicial system comes to its conclusion to bring our claims.”

According to the Economic Times, a conflict between the two companies has been taking place over the past several months. Although Future Group is the one that cut ties, the article states that the tension began when Future began to sell rival chocolate products that provide higher profit margins. The two companies have been quoted with clashing opinions on the issue:

Future Group’s take:

“We have found out from our intelligence network that the company is not cutting uniform deals with all retailers and probably has better deals with international retailers where there are larger stakes involved. We find their ‘conditional terms’ unacceptable, offering fill rates (stocks on shelf) of only 65%.”

Cadbury’s take:

“Sales from emerging markets like India are vital to global sales and therefore it is unlikely that Cadbury will discriminate on this front.”

The article also says that Future Group has come into conflict with Frito-Lay and GlaxoSmithKline in the past as well, though those issues have since been resolved.

The new bill, proposed by Rep. Peter Welch (D-Vt.), will force companies to notify their contracting agency’s inspector general in writing if they find evidence of illegal behavior or suspect they were overpaid for a contract. If the contractor fails to do so, it could be suspended or debarred, according to the article.

The article points out that regulators have also opened a new case to look into the current major exemptions in the FAR regulations right now: 1) contractors who have less than $5 million in government contracts; 2) contracts dealing with commercial items; and 3) contracts performed overseas. Welch (pictured) told a congressional hearing that the latter exemption sends the message to contractors: “if you’re going to commit fraud, go overseas and do it.”

Welch has also noted concerns about the lack of a commitment by federal regulators to create a timeline concerning these regulations.

According to the article, the issue came about after various Adult Fire dancers told Lorelle Katelan, the owner of Adult Fire, that they wanted to be paid the same rate as Bombshells and Sex Bomb dancers. Adult Fire paid its female dancers only $290 per 20 minute show, while the other two companies both paid $320. The owner of Bomb Shells, Tracey Craig, points out that “strippers were not supported by a union and had not been awarded a payrise in years.”

And if you’re thinking about making that corny joke, first read the comment section of Yahoo’s report on the story, where you will find that many of them have already been said.

It is almost unheard of for a person to sue his business partners for alleged FCPA violations – or any kind of violations for that matter – in order to not be implicated himself. As the FCPA blog points out, previous precedent was set when Alba sued Alcoa over alleged Bahrain bribery. The 76-year-old Grynberg says he had no knowledge of the alleged bribes and hopes to avoid DOJ prosecution by filing suit against the defendants. As he put it, “Unless I assert that I was an unwilling participant in this, my neck could be on the line. I’m too old to go to prison.”

This lawsuit comes only a couple weeks after Grynberg sued BP and Lord Browne for alleged bribery in Grenada. In fact, the Telegraph says Grynberg has brought over “73 separate lawsuits against rivals in his industry. Mr. Grynberg admits that he is litigious, but claims that he has a 98 percent success rate in court actions.”

Whether or not this subterfuge will keep Grynberg out of prison remains to be seen, but we do know he’ll be spending quite a bit of his remaining years in court.

In a related story, the Congress of South African Trade Unions (COSATU) announced plans to protest rising food, electricity and transport costs through marches, demonstrations and boycotts, according to South Africa’s Independent Online. Zwelinzima Vavi, COSATU Secretary-General, wants these protests to “put pressure on food manufacturers, retail companies and farmers so that they stop profiting on the expense of the poor and ordinary South Africans.”

The South African Competition Commission has increasingly cracked down on price-fixing cartels under its head commissioner, Shan Ramburuth (pictured). The Commission has been especially aggressive in areas that affect the nation’s poor such as the food and construction industries.

The SEC filing can be found here, however, if you don’t want to wade through that entire document, the relevant paragraph says:

In 2007 the Company disclosed that the U.S. Securities and Exchange Commission has made an informal inquiry of the Company regarding possible violations of the Foreign Corrupt Practices Act in connection with the sale of medical devices in certain foreign countries. Subsequently, in 2008, the Company received a subpoena from the U.S. Department of Justice, Criminal Division, requesting certain documents for the period January 1, 2000 through the present in connection with the U.S. Securities and Exchange Commission inquiry. In 2006 the Company announced that it received a subpoena from the U.S. Department of Justice, Antitrust Division, requesting documents for the period January 2001 through the present regarding possible violations of federal criminal law, including possible violation of the antitrust laws, relating to the manufacture and sale of orthopaedic implant devices. Stryker is fully cooperating with the U.S. Department of Justice and the U.S. Securities and Exchange Commission regarding these matters.

Stryker came under DOJ scrutiny earlier for unusual payments “involving consulting contracts, trips and gifts to U.S. doctors.” And, just to add a little more drama to the story, Stryker was prosecuted for the unusual payments by U.S. Attorney Christopher Christie. You may recall Christie’s own little 15 minutes of fame in January after it was discovered he gave a no-bid contract to monitor a settlement between Zimmerman Holdings and the DOJ to his former boss, John Ashcroft.

As for Stryker’s possible FCPA violations, it remains to be seen what, if anything, will stem from the DOJ investigation.

With recent publicized stories of whistle-blowers making small fortunes for calling-out cartels, and after the success of German and British authorities paying informants for the names of people evading taxes through Liechtenstein bank accounts, the hope is that this new plan will encourage more employees to speak up about their companies’ illegal habits. According to the Independent:

Simon Williams, the OFT’s senior director of cartels and criminal enforcement, said: “We believe that it is in the public interest to offer financial incentives in the hope that it will encourage more people who have good information about the existence of hard-core cartel activity to come forward.”

Obviously, the information has to be good – whistleblowers will only get paid after a successful prosecution. The OFT has established a hotline (0800 085 1664) as well as an email address (cartelshotline@oft.gsi.gov.uk) that aspiring whistle-blowers can use to report bad behavior.

Experts say that it is highly unusual for a foreign-owned company to file suit in a U.S. federal court. Although this brings down the wrath of the Justice Department on Alcoa, it also opens Alba up for further scrutiny. According to the Wall Street Journal:

The reason it’s rare for governments to accuse U.S. companies of corruption in American courts, said attorney Dan Newcomb of Shearman & Sterling, is that “once you raise a question of corruption, the sovereign runs the risk they will be embarrassed by the requests of discovery from the private party.” In this case, he added, “They have to be prepared to withstand Alcoa coming back to them and saying, ‘We want to look at every other corrupt transaction you have been involved in.’ ” Mr. Newcomb called Bahrain’s move an indication of the level of concern in the region that oil wealth will be lost to fraud and waste.

A law professor gave a similar opinion to Bloomberg media, arguing that this case will likely be settled out of court for the best interest of both parties:

“It’s unusual for another country to come into a U.S. federal court to pursue a U.S. private company,” said Carl Tobias, a law professor at the University of Richmond in Virginia. “When you subject yourself to the U.S. court system there could be discoveries that are embarrassing to the plaintiff. It’s hard to imagine this going to trial. A settlement could be worth it to both sides not to have a public dispute.”

Because of Flowserve’s “thorough review of the improper payments and the company’s implementation of enhanced compliance policies and procedures” the DOJ will delay prosecuting the company for three years, according to a DOJ press release. If Flowserve and its subsidiaries play nice during that time, the DOJ “will dismiss the Criminal Information.”

The penalty wasn’t a surprise for the company (it had predicted a fine of $11 million in its 2007 third quarter report with the SEC), and stock value hasn’t responded to the report. In fact, the day of the announcement, Flowserve shares closed 12 cents higher than it opened.

The raids came after German authorities came into possession of a data DVD containing information on wealthy German citizens who transferred large amounts of money to Liechtenstein banks (Liechtenstein often frustrates Western nations due to the lack of transparency in its banking system). German citizens have been using it for years to shelter their wealth and avoid paying large taxes, though unfortunately for them, “everybody’s doing it” isn’t a proper legal defense. German prosecutors promise that charges will be brought against offenders, and say it’s only a matter of time until enough evidence is collected to file suit.

So far the only individual named as a suspect in the case is Klaus Zumwinkel (pictured), the former Chief Executive of Deutsche Post, the German mail company. Although he was a respected businessman in his country, these allegations forced him to resign last Friday.

German Chancellor Angela Merkel pledged to put pressure on Liechtenstein Prime Minister Otmar Hasler (who also doubles as his country’s finance minister) to increase transparency between Liechtenstein banks and the rest of Europe. Though Liechtenstein lies in the heart of the European Continent, it is not a member of the EU and therefore does not have to abide by the financial laws of the bloc.